Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to BlackRock, Inc. (NYSE:BLK) changed recently.
Is BLK a good stock to buy now? BlackRock, Inc. (NYSE:BLK) has seen an increase in enthusiasm from smart money in recent months. BlackRock, Inc. (NYSE:BLK) was in 39 hedge funds’ portfolios at the end of September. The all time high for this statistic is 47. There were 37 hedge funds in our database with BLK positions at the end of the second quarter. Our calculations also showed that BLK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to check out the fresh hedge fund action surrounding BlackRock, Inc. (NYSE:BLK).
Do Hedge Funds Think BLK Is A Good Stock To Buy Now?
At third quarter’s end, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. On the other hand, there were a total of 47 hedge funds with a bullish position in BLK a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in BlackRock, Inc. (NYSE:BLK) was held by Markel Gayner Asset Management, which reported holding $124.1 million worth of stock at the end of September. It was followed by Junto Capital Management with a $101.3 million position. Other investors bullish on the company included AQR Capital Management, Citadel Investment Group, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Heard Capital allocated the biggest weight to BlackRock, Inc. (NYSE:BLK), around 9.21% of its 13F portfolio. Junto Capital Management is also relatively very bullish on the stock, dishing out 3.68 percent of its 13F equity portfolio to BLK.
Now, some big names were leading the bulls’ herd. ExodusPoint Capital, managed by Michael Gelband, created the most valuable position in BlackRock, Inc. (NYSE:BLK). ExodusPoint Capital had $9.9 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $8.1 million position during the quarter. The following funds were also among the new BLK investors: Peter Seuss’s Prana Capital Management, Karim Abbadi and Edward McBride’s Centiva Capital, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as BlackRock, Inc. (NYSE:BLK) but similarly valued. These stocks are Intuit Inc. (NASDAQ:INTU), Toronto-Dominion Bank (NYSE:TD), Intuitive Surgical, Inc. (NASDAQ:ISRG), British American Tobacco plc (NYSE:BTI), Mondelez International Inc (NASDAQ:MDLZ), Caterpillar Inc. (NYSE:CAT), and American Express Company (NYSE:AXP). All of these stocks’ market caps match BLK’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.9 hedge funds with bullish positions and the average amount invested in these stocks was $4041 million. That figure was $923 million in BLK’s case. Intuit Inc. (NASDAQ:INTU) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 7 bullish hedge fund positions. BlackRock, Inc. (NYSE:BLK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BLK is 65.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on BLK as the stock returned 24.6% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.